Those who can pay most, will pay most?

Everybody pays, and those who can pay most will pay most.

This is a direct quote from the Budget speech on December 7th 2010, of Ireland’s Minister for Finance, Brian Lenihan.

Since then Irish workers have braced themselves for the impact on pay packets of the new ‘Universal Social Charge’ and changes to tax bands.  The effect will be harsh, but everyone is in this together and ‘those who can pay most, will pay most.’

Newspapers and websites published calculators to help people work out the effect of the budget on their personal take home pay.  There were significant differences between various sites and it became clear that the effects of the Universal Social Charge and alterations in tax bands were so complex that it was almost impossible to calculate the impact.  For example, one site suggested that the impact of the budget on a widow over 60 on an annual income of €45,000 would be in the order of €83 per month, another calculated the reduction in pay at €65 per month.

Reality has arrived in pay packets since the end of the first week in January. The effects of the budget on ‘ordinary’ workers of all ages and many circumstances have been quite shocking.  Many were openly stunned;  – not least the widow in the example above who found that the reduction in pay was €216 per month.  A medical card holder was equally badly hit by the abolition of the reduced PRSI rate and finds that they are paying an extra €180 per month.

‘Everybody pays, and those who can pay most will pay most‘ These are the exact words from a transcript of the Budget speech.  It was in fact a lie.

The impact of the Universal Social Charge on a single worker with an annual salary of €150,000 will result in an INCREASE in take home pay of about €120 per month.  And it has been calculated that a person with an income of €1million per annum will be some €23,000 better off as a result of this budget.

‘Those who can pay most, will pay most?’

For more see the Irish Independent.